Full Linowes package en route to Assembly and a chilly reception

February 01, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- Gov. William Donald Schaefer has decided to send all of the Linowes commission's sweeping tax-restructuring proposal to the General Assembly, even though most legislators and his own lieutenant governor agreed yesterday that there is no realistic chance the entire plan will be enacted this session.

The plan calls for increasing the state sales tax to 5 1/2 percent from 5 percent; making the personal income tax more progressive by levying higher taxes on those with higher incomes; establishing a 2 percent personal property tax on the value of cars and boats; and sending millions of dollars back to the state's 24 jurisdictions for property tax relief to offset some of the other tax increases. The changes would raise an estimated $800 million in new tax revenue the first year alone.

The 17-member commission, headed by Montgomery County lawyer R. Robert Linowes, said its proposal would make Maryland's tax system fairer while redistributing the new revenue to those programs, such as education and transportation, and to those jurisdictions, such as Baltimore, that need it the most.

Legislators in both houses immediately declared the proposal all but dead for this legislative session, but said they would hold hearings on it this session and then use the Linowes report as the basis for a summerlong study that will probably include public hearings.

"I don't think at this juncture there's a snowball's chance in hell for the full bill to pass," said Sen. John A. Cade, R-Anne Arundel, an influential member of the Budget and Taxation Committee. "What conceivably could happen is if the administration insists on pushing the full bill, they won't get anything."

Administration and Assembly leaders alike said they hope a consensus can be reached before the next General Assembly convenes in January 1992 regarding how much money the state needs to provide services over the next decade, and the best way to raise it. Some held out hope that parts of the plan might be enacted this year.

"Our goal is to pass as much of it this session as possible," said Daryl C. Plevy, an executive assistant to Gov. William Donald Schaefer.

But Lt. Gov. Melvin A. Steinberg, who is in charge of the administration's legislative agenda and who was a legislator himself for 20 years, said the process is likely to move more slowly, especially on a proposal with such lasting ramifications.

"Before all of the issues are addressed . . . it will probably take by next session," he said. "I think the chance of the total bill and every aspect of it passing this session is very remote."

Taxpayer protest groups from around the state showed up yesterday at the State House to denounce the Linowes tax proposal, saying it would only fuel a more vehement taxpayer revolt against Governor Schaefer and his "big spending ways."

But Senate Majority Leader Clarence W. Blount, a Baltimore Democrat, said the plan is crucial to financially troubled Baltimore.

"It is very clear this is the last hope to give any relief or equality to Baltimore City and the poorer subdivisions," he said. "We're either going to have to do it this year or wait until things get so bad that we'll just have to do something."

Senate President Thomas V. Mike Miller Jr., D-Prince George's, said it might be possible to enact this year the part of the report calling for a more progressive income tax. But his House counterpart, Speaker R. Clayton Mitchell Jr., D-Kent, said the legislature should hold one joint hearing on the bill and then send the entire package to summer study.

The one part of the proposal that legislators in both houses agreed has virtually no chance of passage is the proposed 2 percent annual tax on cars and boats.

"It's repugnant to most Marylanders," said Mr. Cade.

Several legislators said their reluctance to enact the broad reforms recommended by Mr. Linowes will not preclude them from considering other, shorter-term proposals to raise taxes to cover an expected deficit in the upcoming budget year. Such adjustments could include the repeal of some sales tax exemptions, a new tax on cigarettes or other less sweeping adjustments, they said.

The administration wanted to wait until after it introduced its $11.56 billion, fiscal 1992 budget today before handing the Legislature the Linowes bill, hoping that by then the lean realities of a recessionary budget would have generated support for restructuring and raising taxes.

For the first time in at least 14 years, the new state budget will be smaller than the one approved the previous year. The proposed 1992 budget will spend less on the environment, transportation, agriculture, juvenile services, economic development and housing, and will cause at least 1,600 vacant state jobs to be abolished, according to documents obtained by The Sun.